Fixing Service Failures Chapter 13

Service Failures: Types, Where, And Why

Types of Service Failures Service product failures Failure to meet explicit or implicit customer requests Failures caused by employee actions or inactions (continued)

Types of Service Failures Failures caused by other guests, random events, or circumstances beyond control of organization

Critical Incidents During Service Encounters Failures in service, itself Negative employee actions, attitudes, or behaviors Unsatisfactory employee response to service failure

Dimensions of Failure Customer failure Where failures happen Severity of failure and recovery

The Importance of Fixing Service Failures

Price of Failure Costs money to lose customer Lost revenue Those who do not return Those who might have come but will not because of negative word-of-mouth (continued)

Price of Failure Unhappy customers twice as likely to spread bad versus happy customers who spread good

Customer’s Response to Failure Service recovery Never to return Complaints Bad-mouthing organization Retaliation Worst-case scenario Avenger

Value of Positive Publicity: Bad-Mouth versus Wow Credibility People telling people Anonymous testimonials Evangelists Exceeding expectations Planning for failure

Dealing with Service Failures How recovery is handled Message to employees Example: British Airways (continued)

Dealing with Service Failures Looking for service failures Complaint as monitoring device Encouraging complaints Body language as complaint Do not forget to ask

Recovering From service Failure

How to Handle a Service Failure Do something quickly Benefits for quick recovery: Reduces overall expense of retaining guests Less expensive to fix problem on-the-spot More likely guest will stay with organization

How Customers Evaluate Recovery Efforts Distributive justice Procedural justice Interactional justice Informational justice Interactional versus distributive versus informational versus procedural justice

Service Recovery System Analysis Identify failures and put in categories Assign reasons for each type for failure Determine why problem occurred Select appropriate recovery strategy Implement recovery Review recovery efforts Follow-up to see if successful

Characteristics of a Good Recovery Strategy Ensure failure is addressed quickly Communicate clearly to employees Should be flexible enough to accommodate different types of failures and different expectations

Customer Defines Failures Not making it better makes it worse Costs of failure to guests Making it right not being enough Being wrong with dignity

Matching the Recovery Strategy to the Failure Nature and severity Causes of failure Severity of Failure Relatively severe failure Apologize and offer red carpet treatment Apologize and provide help to extent possible Relatively mild failure Apologize and replace Apologize and extend sympathy Organization caused failure Guest caused failure Cause of Failure

From Bad to Good Learning from failures Service recovery From Ow! to Wow! Successful service recovery